Abrupt cuts to fuel subsidy ‘can cause hardship’
BANDAR SERI BEGAWAN
Public uproar can be prevented by careful planning, gradual enforcement: BEDB acting chairman
ABRUPT removal or reduction of fuel subsidies could deal a severe blow to the living costs of most Bruneians, Dato Timothy Ong, acting chairman of the Brunei Economic Development Board (BEDB), told The Brunei Times.
A possible adverse public reaction to such changes, if and when the government decides to take this step, will be prevented if these are done in a carefully studied manner, he said in an interview.
"The current (fuel) price in Brunei is not aligned with the real global prices ... subsidies are generally not a good idea, however for non-economic considerations we sometimes need to have subsidies.
"But if we cut the subsidies dramatically it will result in the increase in the cost of living for most people, there could be a public uproar," he said, adding there is a need to study steps to manage the outcome.
Tareq Muhmood, chief executive officer of HSBC Brunei, agrees with the need for carefully studied steps. The banker, who was formerly based in Iraq, said he has witnessed the removal of subsidies in other countries such as Iraq, which once benefited from significant subsidies.
"In the last three or four years in Iraq, in the news, they have actually gone out in the process of removing subsidies in petrol.
"There have not been mass unrest, the Iraqis have adapted and allowed the country to function on a real market basis," he said in an interview with The Brunei Times over the weekend.
However, it has to be carefully done, he said, stressing that he is confident Bruneians will be able to come to terms with such economic changes.
"If they do decide to remove the subsidies, I'm sure it would be done in a well thought manner, where it will allow Bruneians to adapt ... to the market of today," he said.
Rosdi Amin Yaakub, deputy CEO of HSBC Brunei, is confident that a reduction in fuel subsidies will only cause short-term effects on Bruneians.
"I believe it will be short-term effects. People have to be creative in terms of how they produce, think of how they would be able to reduce the costs as at the end of the day, it's the consumers who want to buy their products ... with no buyers ... the economic cycle won't work," he said.
In an interview, Rosdi said that without proper pricing of fuel products in Brunei, "we are just not going to put (to proper) use the resources anyways".
Through the reduction of fuel subsidies, the Brunei government would be able to save money and allocate the money to proper develop-ment of resources the country requires.
There will be "luxury change" among Bruneians who are known for lavish spending, he said, adding though the changes need to be done in a proper manner through more dialogue between relevant agencies.
In a recent speech last week the Minister of Energy, noting that with international oil prices remaining high at US$90 per barrel voiced out his concern over the country's oil usage and the uneasiness about how it does not reflect the country's population and industrial activities.
The Brunei Times